Housing markets face affordability pressures in UK and Spain

The housing and rental markets in the United Kingdom and Spain are facing significant pressure due to affordability issues and supply shortages. In the UK, reliance on rental guarantors has doubled over the last 18 months, rising from 9% in January 2025 to 18.4% by July 2026, as landlords seek financial security following the Renters’ Rights Act. Average UK rents reached £1,369 in July 2026, with tenants typically spending one-third of their income on housing.

To address sector challenges, the National Residential Landlords’ Association (NRLA) has proposed tax reforms, including changes to Capital Gains Tax and energy efficiency incentives, to encourage investment. Additionally, advocacy groups are urging the UK government to expand the Private Rented Sector (PRS) Database to include rent and eviction data to better empower tenants.

In Spain, a severe housing crisis persists with high demand and scarce supply, particularly in major cities like Madrid and Barcelona, where prices per square meter have doubled the national average. Meanwhile, UK house price growth remains subdued, with Nationwide reporting a 1.6% annual increase as high mortgage costs and geopolitical tensions continue to impact market activity.